One of the simplest way to invest/trade Oil Companies is to study the Brent/WTI price movements because they are very correlated.
Every oil price crashes, oil companies will follow as well. Commodities is very volatile and for that comes an opportunity to profit.
In the last 50 years, every time the stock drops more than 50%, it follows by a rally. For this stock, it crashed 6 times in the last 50 years the stock crashed every 8 years however that average is skewed by a massive bull run on the stock from its recovery of 1985-86 crash until it reached its peak in 2008 (a whopping 2783% rally!!)
Before that massive ridiculous rally, the stock crashed on average every 4 years. In the most recent 3 crashes is within the last 13 years.. on average roughly, the stock crashed more or less every 4 years
The last two crashes were followed by a rally with an average of 180% bull run. Currently the stock is on a 274% bull run!
Actionable : It's hard to trade/invest in oil companies using the normal valuation method i.e DCF due to its tight correlation with oil prices. I let the price movemet of oil to decide for me if its time for me to buy this stock. Currently I am on the sideline and wait for a correction.
Every oil price crashes, oil companies will follow as well. Commodities is very volatile and for that comes an opportunity to profit.
In the last 50 years, every time the stock drops more than 50%, it follows by a rally. For this stock, it crashed 6 times in the last 50 years the stock crashed every 8 years however that average is skewed by a massive bull run on the stock from its recovery of 1985-86 crash until it reached its peak in 2008 (a whopping 2783% rally!!)
Before that massive ridiculous rally, the stock crashed on average every 4 years. In the most recent 3 crashes is within the last 13 years.. on average roughly, the stock crashed more or less every 4 years
The last two crashes were followed by a rally with an average of 180% bull run. Currently the stock is on a 274% bull run!
Actionable : It's hard to trade/invest in oil companies using the normal valuation method i.e DCF due to its tight correlation with oil prices. I let the price movemet of oil to decide for me if its time for me to buy this stock. Currently I am on the sideline and wait for a correction.
